Exempted PF Trust

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What is an Exempted PF Trust?

An Exempted Provident Fund (PF) Trust is an employer-managed provident fund scheme that operates under the guidelines of the Employees’ Provident Fund Organisation (EPFO) but is not directly managed by it. Instead of contributing to the EPFO, the employer maintains a separate trust that follows EPF rules while offering additional benefits to employees.

How Does an Exempted PF Trust Work?

Under the exempted PF system, the employer establishes trusts, registered with the EPFO, to manage employees’ provident fund contributions. The EPF members pay their regular contributions, which the employer also matches, similar to the regular EPF scheme.

The primary difference is that in an exempted PF trusts:

The employer controls fund management.
The trust must provide interest rates at least equal to the EPFO-declared rate.
Employees can view their balance separately from the EPF passbook provided by EPFO.

Exempted PF Contributions

Contributions under an exempted PF trusts remain the same as the unexempted EPF system:

Employee Contribution: 12% of Basic Salary + Dearness Allowance (DA)
Employer Contribution: 12% of Basic Salary + DA, out of which 8.33% goes to the Employees’ Pension Scheme (EPS) (up to Rs. 1,250 per month), and the remaining is deposited into the provident fund.

Benefits of Exempted PF

Some of the key advantages of an exempted PF trusts include:

Higher Returns: Since funds are actively managed, they may yield better interest than EPFO.
Faster Withdrawals: The employer processes withdrawals directly, leading to reduced processing time.
Transparency: Employees can get detailed reports and statements on fund performance.
Customized Benefits: Some organizations provide additional benefits beyond EPFO’s structure.

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Withdrawal from Exempted PF Trust

Employees can withdraw funds from exempted PF trusts under the same conditions as regular EPF accounts. These include:

Retirement (After 58 years of age)
Resignation (before 5 years of service – Taxable)
Unemployment for more than 2 months
Medical Emergencies, Higher Education, or Marriage

Viewing the Balance of an Exempted PF Trust

Unlike regular EPF accounts, which employees check through the EPF passbook on the UAN portal, the balance of an exempted PF trusts is available through the employer’s trusts website or HR department.

EPF Passbook & UAN for Exempted PF Trust

Employees with Exempted PF Trusts will still have a Universal Account Number (UAN), but their passbook will not be updated on the EPFO portal. Instead, they must check their employer’s trust portal for contributions and interest updates.

PF Transfer from Unexempted to Exempted

If an employee switches jobs from an EPFO-managed company to one managing an Exempted PF Trust, they must transfer their EPF balance. The steps include:

Login to the EPFO portal using UAN.
Submit a transfer request via the ‘One Member – One EPF Account’ feature.
Approval from the previous employer and trust.
Transfer completion.

Details Required to Transfer PF

To process an EPF transfer from an unexempted to an exempted employer, the following details are needed:

UAN Number
Previous EPF Account Number
Name and Establishment ID of the Exempted Trust
Employer Attestation

Rating of Exempted PF Trust

The EPFO regularly audits and assigns ratings to exempted PF trusts based on compliance, interest rates, fund management, and timely settlements. Employees can check their employer’s trust rating to ensure security and reliability.

Tax Benefits on Exempted PF Trust Contributions

Contributions to an Exempted PF Trust qualify for tax benefits under Section 80C.
Withdrawals before five years of service are taxable.
Interest earned beyond a specific limit may also be taxable as per income tax laws.

Conclusion

The Exempted PF Trusts system offers employees greater flexibility, faster withdrawals, and potentially higher returns while still operating under EPFO rules. Employees should carefully verify their employer’s trust compliance, interest rates, and withdrawal policies before opting for this scheme.

Frequently Asked Questions

What is the main difference between an exempted and unexempted PF?

Exempted PF trusts are employer-managed, whereas unexempted PF is directly managed by the EPFO.

How can I check my exempted PF balance?

You need to check your employer’s trust website or contact the HR department, as exempted PF balances are not available on the EPFO passbook.&amp;amp;lt;/span></p>

Can I transfer my PF from an exempted to an unexempted account?

Yes, you can transfer funds using the EPFO’s online transfer facility.

Is withdrawal from an exempted PF trust taxable?

Withdrawals before five years of service are taxable. Post-retirement withdrawals are tax-free.

Do exempted PF trusts offer higher interest rates than EPFO?

They must at least match EPFO rates, but some trusts provide higher returns.

Will I have a UAN if my employer has an exempted PF trust?

Yes, but your EPF passbook will not be updated on the EPFO portal.

What happens to my exempted PF balance if I leave the company?

You can withdraw the balance or transfer it to your new employer’s EPF account.

Can an employer deny withdrawal from an exempted PF trust?

No, employers must follow EPFO rules and cannot deny legitimate withdrawals.